What is Bhc franchisor's responsibility regarding lease obligations after accepting an assignment of the lease?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
eliver to Landlord its assumption of Tenant's rights and obligations under the Lease. Franchisor shall pay, perform, and be bound by all the duties and obligations of the Lease applicable to Tenant, except that the Franchisor may elect not to assume or be bound by the terms of any Amendment to the Lease executed by Tenant without obtaining Franchisor's prior written approval, which shall not be unreasonably withheld or delayed.
- C. At or after the time Franchisor assumes Tenant's interests under the Lease, the Franchisor may, at any time, assign such interests or sublet the Premises to a BHC franchisee. Any such assignment
shall be subject to the prior written consent of the Landlord, which Landlord shall not unreasonably withhold as it relates to a creditworthy franchisee who otherwise meets Franchisor's then-current standards and requirements for franchisees and agrees to operate the restaurant as a BHC Restaurant pursuant to a Franchise Agreement with Franchisor. Upon receipt by Landlord of an assumption agreement pursuant to which the assignee agrees to assume the Lease and to observe the terms, conditions, and agreements on the part of Tenant to be performed under the Lease, the Franchisor shall thereupon be released from all liability as tenant under the Lease from and after the date of assignment, without any need of a written acknowledgement of such release by Landlord.
- Access to Premises During Lease. As provided in the Franchise Agreement, Franchisor shall have the right to access the Premises during continuance of the Lease to ensure compliance by Tenant with its obligations under the Franchise Agreement.
8. Additional Provisions.
- A. Landlord hereby acknowledges that the provisions of this Addendum to Lease are required pursuant to the Franchise Agreement under which Tenant plans to operate its business and the Tenant would not lease the Premises without this Addendum.
- B.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, when Bhc assumes a tenant's interest in a lease, it has the option to assign these interests or sublet the premises to a Bhc franchisee. This assignment is contingent upon the landlord's prior written consent, which cannot be unreasonably withheld if the franchisee is creditworthy, meets Bhc's standards, and agrees to operate the restaurant under a franchise agreement with Bhc.
Upon the landlord's receipt of an assumption agreement, where the assignee commits to adhering to the lease terms, Bhc is released from all lease liabilities from the assignment date onward. This release does not require written acknowledgment from the landlord. Bhc is responsible for lease obligations incurred after the effective date of the assignment. However, Bhc is not required to begin paying rent until the landlord delivers possession of the premises to Bhc.
If Bhc elects to assume the lease, it must address any defaults specified by the landlord within the given timeframes and formally assume the tenant's rights and obligations under the lease. Bhc is obligated to fulfill all duties and obligations of the lease applicable to the tenant. However, Bhc can choose not to be bound by any lease amendments made by the tenant without Bhc's prior written approval, which will not be unreasonably withheld or delayed.
This arrangement benefits Bhc by providing flexibility in managing restaurant locations and potentially transferring lease obligations to franchisees. For a prospective franchisee, this means that Bhc's involvement in the lease can provide a level of security, as Bhc may step in to ensure the lease continues with a new franchisee if the original tenant defaults. However, it's crucial for franchisees to understand the conditions under which Bhc assumes and assigns the lease, as well as their own responsibilities under the franchise agreement and lease terms.